HELENA – The state of Montana could lose about $128 million annually in the next two fiscal years to its general fund because of federal tax reforms, a legislative panel considering a study of the state’s tax structure was told Tuesday.

“We’re looking at a significant loss of revenue,” Department of Revenue Director Mike Kadas told members of the Revenue and Transportation Interim Committee about how the federal tax reforms could hurt the state budget.

Kadas said it has been “a challenge” to fit the legislative proposals in to the models now moving through Congress as the budget is something of a moving target.

The Senate approved a $1.5 trillion tax bill early Saturday, hailed as the largest tax overhaul in 30 years. Republicans said the package helps people of all incomes and helps the economy. Democrats have said the plan benefits the rich, was written in a hurry and did not have proper review. The bill will now go to a House conference committee with the House to iron out differences.

Kadas outlined his fears how it could impact Montana in a one-page memo Monday to state Budget Director Dan Villa.

“I have concerns that these changes will have a net impact that negatively impacts the state general fund,” he wrote.

He described the federal process of pushing through the tax reform as “horrible,” adding there were no hearings in which the states or anyone else could comment.

Kadas said House provisions would take about $6 million a year each in Fiscal Year 2018 and FY 2019 and Senate provisions could take $122.5 million each year.

Some of those reductions include individual income tax ($80 million), corporation income tax ($13 million), elimination of the Affordable Care Act’s individual mandate ($5.5 million) and elimination of federal mineral royalties ($24 million).

The news comes after lawmakers met in a special session in November to close a $227 million shortfall to the state’s $10.3 billion budget.

Gov. Steve Bullock said he presented a balanced budget, which GOP lawmakers rejected. He said the budget they passed was based on incorrect estimates by the Legislative Fiscal Division.

The issue prompted Tuesday’s discussion on reviewing the state tax structure, although members conceded such a study would not be done by the 2019 legislative session. Officials hope such a review would allow for more accurate budget projections.

The governor, who made $76 million in budget cuts as the session began, signed six bills from the special session to fill the budget gap. They included temporarily suspended contributions to a judge’s retirement system to save $ 2.8 million, another to temporarily suspend payments to a state employee health care plan to save $10 million and one to charge a 3 percent management fee on some Montana State Fund investments to raise nearly $30 million over the next two years.

Revenue and Transportation Interim Committee members discussed doing a study of the state’s tax structure but also knew that the Legislative Finance Committee was doing the same thing.

Bob Story, former state Senate president and now head of the nonprofit Montana Taxpayers Association, said such a study was needed, adding the last real review was 20 years ago. He said that committee generated several bills, none were passed by the Legislature, but he believed the work was important.

“It’s time for the Legislature to look at the whole tax (structure) in Montana,” Story said.

He added the revolt would come if property taxes were affected.

Story said such a study would be better off if it was guided by the Revenue and Transportation Committee rather than Legislative Finance, which works closely with Legislative Fiscal Division staff, adding it would be more independent.

Revenue committee Chairman Rep. Tom Jacobson, D-Great Falls, said he felt such a study was more in the “wheelhouse” of his committee.

Sen. Jill Cohenour, D-East Helena, said they should send a letter to the Legislative Finance Committee asking to be part of the discussion. Sen. Dick Barrett, D-Missoula, said the committee should talk about the design and goals of the study. He also said in the next session the state may be facing serious revenue issues in the wake of the federal tax cut.

Sen. Duane Ankney, R-Colstrip, said he supported the idea of a joint committee looking at the tax structure.

“If you’re going to do this, it has to be done right,” he said.

A letter to the Legislative Finance Committee, which meets Monday, was approved Tuesday.

The letter asks to set parameters for what the state wants to study, sets aside a committee to do the study and in the 2019 session provide funding to the committee.

“We believe the state would receive the greatest benefit if the limited amount of time remaining in the interim is spent developing a study bill for preintroduction during the 2019 Legislative session,” the letter states.

“The legislation should define the reasons for studying the state tax structure, identify a committee to undertake the study (perhaps a special committee including members of the public and other stakeholders), and provide funding for the committee,” it notes, adding it welcomes collaboration with the Legislative Finance Committee.

In other action, Legislative Fiscal Division staff updated the panel with the latest revenue collections and said the FY 18 general fund, through the end of November, is at $92.6 million or 12 percent ahead of last year. They said it was mostly because of $56 million in transfers.